India Announces Latest Tax Increase on Imported Smartphones, Including iPhone

[MacRumors]

India is preparing to raise its customs duty on imported mobile phones -- including Apple's iPhone models besides the iPhone SE -- from a previous standard of 15 percent to 20 percent (via Bloomberg). The latest tax hike for imported iPhones comes under two months after the last one, which saw the taxes on imported mobile phones increase from 10 percent to 15 percent.

Like the previous increase, the new raise on taxes for imported smartphones is a move by the Indian government to promote India's domestic manufacturing and get more companies to build products within the country. While Apple has set up an iPhone SE assembly in India, and is looking into doing the same for the iPhone 6s, this further increase is yet another setback for Apple's expansion in India.

India is raising custom duties on imported mobile phones to 20 percent from 15 percent, a bid to promote domestic manufacturing that may hurt Apple Inc.'s ability to compete in the world's fastest-growing smartphone market.

The iPhone maker has been seeking to expand its presence in India and has negotiated with the government for lower tariffs on certain components. But the latest duties -- part of a budget unveiled Thursday -- show the country moving in the opposite direction.

The raise is part of Prime Minister Narendra Modi's long-running Make in India program, aimed at getting foreign companies to build more manufacturing and assembly operations in India. At the time of the 15 percent tax on imported smartphones, the price of iPhone models rose by about 3.5 percent across the board (excluding the Bangalore-built iPhone SE). The most expensive model, a 256GB iPhone X, cost 105,720 rupees ($1,646), up from 102,000 rupees ($1,593).

As most of Apple's hardware becomes more expensive in India, users of the company's software in the country spoke about the poor performance of services like Apple Maps and Siri. One user in Bangalore, Mihir Sharma, told CNBC that "Apple Maps is a joke in India," and many users reported that Siri "often struggles" to make sense and correctly respond to Indian accents. Analyst Faisal Kawoosa said, "There is no denial that the Apple ecosystem isn't aligned much to the usage and value of Indian users," and until Apple can expand its footprint in India most customers believe it will stay that way.

Article Link: India Announces Latest Tax Increase on Imported Smartphones, Including iPhone

 

[JosephAW]

Sounds like Apple needs a better negotiator. Any relatives of Trump available?

 

[Scottsoapbox]

A) Tariffs don't work.

B) This raises everyone's price not just Apple.

 

[akbarali.ch]

iPhone is already expensive and this would bump up the price bit more. The other issue is the Apple's other services doesn't exist e.g. wallet/Apple Pay/Pay cash, Maps (which is just an earth image), Apple store app, Apple news app, book store.

 

[mozumder]

This only harms their software industry if they cause hardware to be more expensive.

Sorry India, but you missed the boat on manufacturing. You snooze you lose. No one is interested in making more expensive products in India.

 

[69Mustang]

A) Tariffs don't work.

B) This raises everyone's price not just Apple.

A)Apparently they do work since Apple has built one factory in India and is looking to expand that presense.

B)The very first sentence in the article makes that clear: "India is preparing to raise its customs duty on imported mobile phones -- including Apple's iPhone models...". I don't think anyone thinks this is an Apple specific situation.

 

[4509968]

As an Indian I find the government's latest moves short-sighted and stupid, as usual. If the government really wants to get investments in manufacturing they should be making it easier to manufacture by cutting down on corruption, streamlining the necessary processes, and providing incentives. Instead the politicians, most of whom come from robber-baron backgrounds, try to use the same muscle-handed tactics of financial threats by taxes and repercussions, thinking that it will work even here.

As for people who think the average Indian even have a say in how the government works, let me clear it, we dont. While the Americans can at the least protest, call their congressman, and have the press have constructive dialog between the people and politicians, Indians get beaten up by state police for even peaceful walk protests. And politicians listen with caste filters in place, so unless you can speak their language and belong to their caste vote bank, forget about even getting their attention.

Long post, sorry, had to vent out a bit.

 

[Avieshek]

$1,646 !! for an iPhone X that too in India

Even America had hiccups with $999 iPhone
[doublepost=1517493677][/doublepost]

As an Indian I find the government's latest moves short-sighted and stupid, as usual. If the government really wants to get investments in manufacturing they should be making it easier to manufacture by cutting down on corruption, streamlining the necessary processes, and providing incentives. Instead the politicians, most of whom come from robber-baron backgrounds, try to use the same muscle-handed tactics of financial threats by taxes and repercussions, thinking that it will work even here.

As for people who think the average Indian even have a say in how the government works, let me clear it, we dont. While the Americans can at the least protest, call their congressman, and have the press have constructive dialog between the people and politicians, Indians get beaten up by state police for even peaceful walk protests. And politicians listen with caste filters in place, so unless you can speak their language and belong to their caste vote bank, forget about even getting their attention.

Long post, sorry, had to vent out a bit.

Modi is influenced by China, of how Apple can themselves bend towards them for business.

 

[5105973]

$1,646 !! for an iPhone X that too in India

Even America had hiccups with $999 iPhone
[doublepost=1517493677][/doublepost]
Modi is influenced by China, of how Apple can themselves bend towards them for business.

Apple did set a bad precedent for themselves there by bending so much for China. I can’t blame Modi for trying to get the same concessions. But it may be a bit too much. In China there’s a sizable population of buyers willing to pay premium prices for iPhones. And Apple already had a strong manufacturing presence in China over which both sides could build a relationship over sales. That made it more alluring for Apple to jump through hoops to do business there.

India is a different story. Apple barely has a footprint there and the affluent population does not necessarily have the same affinity for iPhones that the Chinese do. I have affluent Indian friends and they do not care about iPhones as a status symbol. They think iPhones are featureless compared to international model Samsungs that offer dual sim capabilities and still have headphone jacks. They are still also more price conscious than what I’ve read about affluent Chinese buyers being described as.

Modi is moving too fast with the barriers to entry for sales. It would be better to wait for Apple to have a more established manufacturing presence. Now, it would be easier for Apple to justify walking away from India and go back to relying on resellers if India’s leadership gets too extortionist. Apple doesn’t really like dabbling heavily in low price segments of the market. I think they only do it to get a foot in the door to sell affluent Indian customers the high end models.

Let Apple establish a presence there selling iPhones. They are global enough to know by now they need to hire native people to make better versions of Apple services and software for India, and to do that they need to set up an office there and hire Indians who know what their own people want and need. These are going to be good paying white collar jobs that India needs just as much as the manufacturing jobs they are angling for.

Indian government doesn’t even want to give Apple a little kiss before putting its hand out demanding the wedding ring.

 

[d5aqoëp]

Instead of giving incentives to manufacture locally, govt increases taxes. This 2018 Budget was a big FAIL. Companies will just not manufacture and leave the country all together. These are the "Achhe Din" as promised by the PM?

As per last time, Apple should be ready to fire the current executive (Michael Coulomb) just like last time and further jack up iPhone prices.

 

[SoN1NjA]

They complain about the price and yet they can only make it go up

 

[Ramchi]

Previous governments also indulged in such tactics citing exchange rate pressure as an excuse (which is also true to certain level) since importing millions of Mobiles going to put pressure on Indian Currency.

Also, Samsung worked out a way with previous Government (THE most Corrupt party in the Entire Universe) NOT to get taxed so much. Same is the case with LG. Apple may be doing the same without having to pay any ransom as others possibly did with previous regime.

Apple as a brand being made to look as something affluent and impossible to aspire to own. Typically, this was done during previous regimes to create Black Market and offload Service Costs (You do not have to serve the market with call centres etc....) and make premium margin. This also created lots of Hawalla channels (for various destructive activities to destabilise the nation) where USD will be bought at Premium using these Black Market sales.

Now various measures effectively killed (requires complete reboot by these black market industry) black market and black money circulations etc...these currency protection measures will be a big pain for importers.

 

[chriscrk]

Sounds like Apple needs a better negotiator. Any relatives of Trump available?

Thanks for the laugh. That was a great joke!

 

[jbizzybeetle]

India is preparing to raise its customs duty on imported mobile phones -- including Apple's iPhone models besides the iPhone SE -- from a previous standard of 15 percent to 20 percent (via Bloomberg). The latest tax hike for imported iPhones comes under two months after the last one, which saw the taxes on imported mobile phones increase from 10 percent to 15 percent.

Like the previous increase, the new raise on taxes for imported smartphones is a move by the Indian government to promote India's domestic manufacturing and get more companies to build products within the country. While Apple has set up an iPhone SE assembly in India, and is looking into doing the same for the iPhone 6s, this further increase is yet another setback for Apple's expansion in India.

The raise is part of Prime Minister Narendra Modi's long-running Make in India program, aimed at getting foreign companies to build more manufacturing and assembly operations in India. At the time of the 15 percent tax on imported smartphones, the price of iPhone models rose by about 3.5 percent across the board (excluding the Bangalore-built iPhone SE). The most expensive model, a 256GB iPhone X, cost 105,720 rupees ($1,646), up from 102,000 rupees ($1,593).

As most of Apple's hardware becomes more expensive in India, users of the company's software in the country spoke about the poor performance of services like Apple Maps and Siri. One user in Bangalore, Mihir Sharma, told CNBC that "Apple Maps is a joke in India," and many users reported that Siri "often struggles" to make sense and correctly respond to Indian accents. Analyst Faisal Kawoosa said, "There is no denial that the Apple ecosystem isn't aligned much to the usage and value of Indian users," and until Apple can expand its footprint in India most customers believe it will stay that way.

Article Link: India Announces Latest Tax Increase on Imported Smartphones, Including iPhone

ok—maybe I missed this lesson in Economics 101 but it seems from my reading that the Indian government’s “import tax” does encourage building factories there.

If most Indian citizens as potential buyers would be most likely to buy the SE—manufactured there—and 6s—if to be manufacturered there, they would not pay an import tax.

Granted, it certainly makes everything else more expensive!

 

[cosmicphotographer]

As an Indian I find the government's latest moves short-sighted and stupid, as usual. If the government really wants to get investments in manufacturing they should be making it easier to manufacture by cutting down on corruption, streamlining the necessary processes, and providing incentives. Instead the politicians, most of whom come from robber-baron backgrounds, try to use the same muscle-handed tactics of financial threats by taxes and repercussions, thinking that it will work even here.

As for people who think the average Indian even have a say in how the government works, let me clear it, we dont. While the Americans can at the least protest, call their congressman, and have the press have constructive dialog between the people and politicians, Indians get beaten up by state police for even peaceful walk protests. And politicians listen with caste filters in place, so unless you can speak their language and belong to their caste vote bank, forget about even getting their attention.

Long post, sorry, had to vent out a bit.

As an Indian, I absolutely concur. Every policy decision being made for the past few years have either been short-sighted, rehashed from existing policies with a new name or utterly downright stupid.

 

[tzm41]

10% to 15% to 20% in two months! What happens next...

 

[Oblivious.Robot]

I was looking at today’s budget session, all the hopes and news about getting a tax break was just a fluff piece. But let’s not just single out Apple over here, I believe the finance minister is juggling a lot with this years budget, on one hand it’s most definitely pro poor and it goes hand in hand with the next years elections on the horizon.

It’s always funny to go online and check everyone classifying themselves as middle class in India, when the reality is that huge chunk of the population can barely afford an iPhone. This year a lot of poor families get healthcare, farmers get relif thanks to additional cess being levied upon, and not to forget the reduction in corporate taxes too.

It’s just that I am okay with actual poor people get a lot of benefits this year, but of course it could be just that the shock hasn’t settled in.
Next years iPhone will be more expensive, heck the Mercedes I planned will cost more too, but I don’t think my problems are remotely comparable.

Again, no comments over the political spectrum over there.
BJP sucks, but Congress sucks arse. India has been ***** out of luck in that regard.

Capital Gains on market investments, now that sucks for me downright.

 

[dsraj]

India is preparing to raise its customs duty on imported mobile phones -- including Apple's iPhone models besides the iPhone SE -- from a previous standard of 15 percent to 20 percent (via Bloomberg).

This is going to be detrimental to the countries if more follow suite. Imagine every country requiring a percentage of the products to be manufactured/assembled locally. It is just not going to be practically and logistically feasible. Ultimately, the people are going to be paying the price.

 

[Agneev]

As an Indian I find the government's latest moves short-sighted and stupid, as usual. If the government really wants to get investments in manufacturing they should be making it easier to manufacture by cutting down on corruption, streamlining the necessary processes, and providing incentives. Instead the politicians, most of whom come from robber-baron backgrounds, try to use the same muscle-handed tactics of financial threats by taxes and repercussions, thinking that it will work even here.

As for people who think the average Indian even have a say in how the government works, let me clear it, we dont. While the Americans can at the least protest, call their congressman, and have the press have constructive dialog between the people and politicians, Indians get beaten up by state police for even peaceful walk protests. And politicians listen with caste filters in place, so unless you can speak their language and belong to their caste vote bank, forget about even getting their attention.

Long post, sorry, had to vent out a bit.

I agree 100%.
[doublepost=1517503376][/doublepost]

I was looking at today’s budget session, all the hopes and news about getting a tax break was just a fluff piece. But let’s not just single out Apple over here, I believe the finance minister is juggling a lot with this years budget, on one hand it’s most definitely pro poor and it goes hand in hand with the next years elections on the horizon.

It’s always funny to go online and check everyone classifying themselves as middle class in India, when the reality is that huge chunk of the population can barely afford an iPhone. This year a lot of poor families get healthcare, farmers get thanks to additional cess being levied upon, and not to forget the reduction in corporate taxes too.

It’s just that I am okay with actual poor people get a lot of benefits this year, but of course it could be just that the shock hasn’t settled in.
Next years iPhone will be more expensive, heck the Mercedes I planned will cost more too, but I don’t think my problems are remotely comparable.

Again, no comments over the political spectrum over there.
BJP sucks, but Congress sucks arse. India has ***** out of luck in that regard.

Capital Gains on market investments, now that sucks for me downright.

Congress is way better than the hindutva focused party.

 

[44267547]

$1,646 !! for an iPhone X that too in India

Even America had hiccups with $999 iPhone

You're correct. A $1,100.00 iPhone X (After tax) is expensive for many. One has to ask yourself can you justify the upgrade from your current iPhone to the iPhone X and what would it do differently that your current iPhone does now to appreciate the upgrade for that price. That's what others are struggling with and I can't even imagine paying $1,646.00 for an iPhone X in India. Thats absurd.

 

[augustya]

And an average Indian is thinking when will we have direct Apple Store in India if the government does not make a conducive environment on the pretext of supporting local manufacturing activities. This is a bad bad decision !! Very Bad decision !

 

[Aniruddh]

Congress is way better than the hindutva focused party.

I saw what they did to this country after ruling it for more than 50 years. Sorry, don't need them back again.

And an average Indian is thinking when will we have direct Apple Store in India if the government does not make a conducive environment on the pretext of supporting local manufacturing activities. This is a bad bad decision !! Very Bad decision !

What's stopping Apple to open a store here? 100% Single retail FDI has already been approved.

Samsung, LG, Motorola all are manufacturing their flagships here. I don't understand what's stopping Apple? Let me tell you what, they want special treatment from government.

https://economictimes.indiatimes.co...ds-on-tax-incentives/articleshow/57781797.cms

India has earlier said that it is not possible to give exemptions to individual companies, especially as the Goods and Services Tax (GST) takes effect later this year, replacing a complex and tiered indirect-taxation structure.

 

[Gen0]

This is very on point, but there are a few missing details.

Apple did set a bad precedent for themselves there by bending so much for China. I can’t blame Modi for trying to get the same concessions. But it may be a bit too much. In China there’s a sizable population of buyers willing to pay premium prices for iPhones. And Apple already had a strong manufacturing presence in China over which both sides could build a relationship over sales. That made it more alluring for Apple to jump through hoops to do business there.

​

Yes and no. Remember Apple's presence in China has nothing to do with the Chinese populace and everything to do with the location and orientation of the people it MUST do business with. It big, they are big, and nobody else is big enough to do the same thing at the same level of consistency. Foxconn and Samsung don't have substitutes... there aren't really any makers of RAM outside China/Taiwan and the more countries Apple have to hop through to make a phone, the more they spend on fuel and logistics moving bits around. Apple has been in China maybe 40 years now and has yet to make a real dent in China, considering the fact that nearly all it's manufacturing is done there.​

India is a different story. Apple barely has a footprint there and the affluent population does not necessarily have the same affinity for iPhones that the Chinese do. I have affluent Indian friends and they do not care about iPhones as a status symbol. They think iPhones are featureless compared to international model Samsungs that offer dual sim capabilities and still have headphone jacks. They are still also more price conscious than what I’ve read about affluent Chinese buyers being described as.

Indian culture completely explains that though. India built itself on the back of IT support and has many very computer-literate people. Tech Support call centre staff... Microsoft Certified course passers... Programming and Webdesign make the bulk of it's upper and middle class.

Apple is closed source, designed for people that are beyond enjoying the 'iron workmanship in the Eiffel Tower' and would rather the picture of it at night with the lights as a finished piece. Apple doesn't make sense for them, as it expects a wide range of same-brand devices to actually be beneficial. The added ease of use connecting your iPhone to your AppleTV is made non-beneficial because everyone has free tech support a phone call away from a friend. It's just as hard to have your son/brother/friend setup Miracast on your PC to your Android, even if it might take them a lot longer but save you several hundred.

Modi is moving too fast with the barriers to entry for sales. It would be better to wait for Apple to have a more established manufacturing presence. Now, it would be easier for Apple to justify walking away from India and go back to relying on resellers if India’s leadership gets too extortionist. Apple doesn’t really like dabbling heavily in low price segments of the market. I think they only do it to get a foot in the door to sell affluent Indian customers the high end models.

Be aware that your classing of 'low price' takes on different meaning in India, where Chinaphones with the speed of the new Pixel can be had for $120... and that is high end in a non-contract setting for the middle class consumer. An iPhone X is to most of India as the Gold Plated Apple Watch was to us. Also realise that where Apple chooses to put it's factories is completely independent of where they want to sell. If Modi is trying to lock in Apple (which I think is the opposite of what he is trying to do; if you can afford an iPhone you can afford the price raise.... not the case for cheaper units) he already has. Apple will not pull out of India's 1bn population over a 5 or 10% tax raise.

Let Apple establish a presence there selling iPhones. They are global enough to know by now they need to hire native people to make better versions of Apple services and software for India, and to do that they need to set up an office there and hire Indians who know what their own people want and need. These are going to be good paying white collar jobs that India needs just as much as the manufacturing jobs they are angling for.

Indian government doesn’t even want to give Apple a little kiss before putting its hand out demanding the wedding ring.

One does not understand Apple it seems. "Better versions of services or software for X" is exactly what Apple does not do. That is specialization and causes fragmentation, particularly in featureset. It either works for you or it doesn't. Modi doesn't want Manufacturing jobs from Apple. It wants manufacturing jobs from ANYONE and that is the big point.

A few decades ago India was much preferred to China, but the behaviours of companies like Coca Cola should make you realize that Modi doesn't want to give Apple a kiss. Many companies gave Coke a kiss in the form of tax break as they were the Apple of the 90s (the worlds biggest biz) and Coke built factories, ran them until the tax break elapsed then up and left the same day they were done and left the factory on the market for sale.

What Modi wants to do is make any business outside India selling smartphones move to India. I imagine it's because he probably wants to retain some of those intelligent Computer Science grads that keep going to the US on H1-Bs. They could in the near future become key in creating a Silicon Valley within India, or at the very least a MediaTek. Also, the more smartphones in India, the lower the country's needs in the realm of PC tech support, so it's definitely already reducing jobs there.
[doublepost=1517507731][/doublepost]You might only be concerned about having an Apple store, but India would be better off with it's own.... even Motorola, than an Apple Store.

 

[Scottsoapbox]

A)Apparently they do work since Apple has built one factory in India and is looking to expand that presense.

B)The very first sentence in the article makes that clear: "India is preparing to raise its customs duty on imported mobile phones -- including Apple's iPhone models...". I don't think anyone thinks this is an Apple specific situation.

A) That's incorrect causation. If the tariff worked Apple and Everyone else would make all of their phones there. If that had happened the misguided government types pushing it wouldn't be doubling down on a bad policy by increasing the rate in the hopes that this time the tariff will work like they think it should. All prior history of tariff failures be damned.

B) And yet the tone of the article is how this is bad for Apple.

 

[augustya]

What's stopping Apple to open a store here? 100% Single retail FDI has already been approved.

Samsung, LG, Motorola all are manufacturing their flagships here. I don't understand what's stopping Apple? Let me tell you what, they want special treatment from government.

https://economictimes.indiatimes.co...ds-on-tax-incentives/articleshow/57781797.cms

I went through this article it talks about more about setting up a manufacturing unit not about the Apple Retail Store. 100% FDI has been approved in certain sectors not all the sectors as far as I know. Yes Apple does wants special treatment and concessions in Tax in setting up a more full scale manufacturing unit here, for which the government have reservations. But as far setting up an Apple Store I really don't understand what is going on behind the scenes even after Tim Cook's frequent visits to India and talks with PM Modi ! This is a typical example of Indian Burecracy which believes in just procrastination !!

 

[69Mustang]

A) That's incorrect causation. If the tariff worked Apple and Everyone else would make all of their phones there. If that had happened the misguided government types pushing it wouldn't be doubling down on a bad policy by increasing the rate in the hopes that this time the tariff will work like they think it should. All prior history of tariff failures be damned.

Apple and everyone else selling phones in India do make the phones there. So what are you talking about? They make the phones there to avoid the tariff. Apple is even trying to make even more phones there to mitigate the effects of the tariffs. In this specific instance, the tariffs were effective. You can't simply apply generalizations to a specific situation and make them valid.

B) And yet the tone of the article is how this is bad for Apple.

The tariff is bad for Apple. It applies to all phone makers (just like the article stated) but is definitely worse for Apple. The majority of what other OEM's sell in India is also manufactured in India. Thus the tariff doesn't hit them as hard as it hits Apple because the majority of what Apple sells in India is manufactured outside of India and subject to the tariff.